Toyota's International Operations Management Essay In The UK.

1.Evaluate International Operations Management real world scenarios.

2. Demonstrate critical awareness of the issues, problems and practices that characterise International Operations Management.

3. Critically evaluate and appraise the role that innovation plays in the development of Operations Management techniques in different national and cultural settings

4. Critically assess the approaches for developing a culture of creativity and innovation in an organisation. 

Overview of Toyota

International operations management is the process of manufacturing the goods and services in international markets and locations. It includes an effective management process that has to consider local production market i.e. capital and labor and global customer needs. It has more emphasis on the contemporary issues relevant to the operation function that are related in ability of firm to effectively cooperate with the supply chain partners to stay competitive in global economy (Brown, Bessant and Lamming, 2013).  There are various organization which face different issues and problem in expanding its operations to other nations. This report includes the international operations management of Toyota in context of United Kingdom. Toyota is a Japanese international automotive manufacturer that is on the fifth position in terms of revenue generation. In this report, there is the discussion about the role of innovation at Toyota in the cultural setting of United Kingdom. Moreover, it addresses the issues and problems which are confronted by the organization in international operation management in United Kingdom. At the end, it consists of some approaches which can be used by the organization to develop a culture of innovation and creativity.

Toyota Motor Corporation is a Japanese multinational automobile manufacturer that is headquartered in Toyota, Aichi, Japan. Founded in the year 1837, the organization is ranked as one of the major international automotive manufacturing corporations. It has employed 364,445 employees all over the world and as of year 2016, it was on the fifth rank in terms of revenue generation. As per the report of 2016, Toyota is the largest automobile manufacturer in the world. In automobile manufacturing industry, it was the first entity that manufactured over 10 million vehicles every year (Toyota Motors, 2018). The firm is using various advanced principles to produce the reliable cars and sustainable growth of community via innovation and excellent quality auto-parts. Toyota is the market leader all over the world in terms of sales of hybrid electric vehicles and it encourages the adoption of hybrid cars all over the world. In January 2017, cumulative sales of Toyota and Lexus hybrid car models attained 10 million milestones.

Moreover, it can be stated about Toyota that is using different low cost and differentiated methods in their operations that assist the organization in attaining more competitive advantage over its competitors. In addition to this, it operates its business with the philosophy of people and perfection. The management of company states that processes and practices shall be developed in a way which helps the working of employees and assist them in enhancing their skills and abilities. 

Toyota’s International Business Expansion

When an organization plans to expand its business operations in international market, first it needs to analyze the market and market trends. As one of the most successful organization, Toyota is operating its business in different international markets such as Japan, Asia, Middle East, Europe, Africa, North America, Latin America and Oceania. In the year 2008, Toyota has become the largest automaker across the globe (Alexander, 2013). The major reason behind this growth is its rapid business expansion and international operations management in global markets. By an effective international operations management, Toyota is able to surpass world’s top car firm i.e. General Electric. The company operates its business all over the world including sales vehicle in Russia and Africa and it is sales leader in Australia. A major factor behind the growth of Toyota Motors is its production system. This major pillar of Toyota’s competitive edge was growth over many decades.

In the year 1989, Toyota Motors has expanded its business operations in United Kingdom and it is successfully operating its business in the country by the use of effective operations strategy. There are various reasons that company has expanded its business in UK market. One of the major reasons is the strong tradition of car and other vehicle production in Britain and large local market for vehicles. In addition to this, United Kingdom offered Toyota industrial transport links to the customers and 230 European British supply partners. Another reason is the profitable working processes and talented workforce of UK. Also the English language is the second language in Japan that has made integration and communication easier.

In United Kingdom, the company has managed its business operations by implementing effective international operation strategies which are stated below:

Greenfield investment is a type of entry mode where a parent organization develops its business operations in foreign country by establishing a wholly owned subsidiary. Under this entry strategy, firms construct new production facilities in the merging market and they also build new offices, distribution centers and other premises (Vasin, Gamidullaeva, and Rostovskaya, 2017). It is one of the most important entry modes that are used by the Toyota while expanding its business in United Kingdom. Under this international expansion, the company has established a new subsidiary in UK named as Toyota Manufacturing UK (TMUK). For effective international operation management, Toyota has constructed its new manufacturing facilities and distribution centers in United Kingdom. By the use of this approach, the company is able to establish a better position to utilize the firm specific advantages. TMUK has organized a technical support team to assist its suppliers to enhance the quality of products under long-term relationship with the suppliers (Hill and Hill, 2012). After a successful establishment in UK, it opened other supporting premises in United Kingdom to train the manufacturing supervisors and staff from all over the Europe region.

International Operations Management Strategies used by Toyota in the UK

Lean manufacturing is one of the major strategies of Toyota that is the major reason behind its effective international operations management. This system is found very efficient and it assists the organization in improving the quality of its products and services. It helps in attaining competitive advantage in international automotive market (Upadhye, Deshmuk and Garg, 2016). Lean manufacturing system is the system of work that is very efficient and democratic as well. Toyota has used the concept of lean manufacturing system due to shortage of resources for production. In addition to this, implementation of lean manufacturing system in manufacturing processes of Toyota can be seen as their reaction to intense competition in automotive sector (Balakrishnan, 2015). 

In United Kingdom, the company has established its subsidiary with the name of Toyota Manufacturing UK. In the country, lean manufacturing has combined the just-in-time production system with the Kanban technique of pull production. Moreover, it is making focus on respecting of employees and encouraging team work at workplace. As mentioned above, the major reason behind UK’s expansion is its working practices and excellent workforce. At Toyota, it is one of the best international operation strategies which are associated with different aspects like inventory control and management, labor management, supply chain management and industrial relations (Slack, Chambers, and Johnston, 2010). By this, Toyota is able to reduce the human effort by 50% and to improve its financial performance. In this way, lean manufacturing strategy at Toyota has an effective potential for controlling transportation cost of materials. It is one of the major innovative practices that are implemented by Toyota in its operations in UK.

Apart from above practices, Toyota has adopted another innovative practice i.e. outsourcing. There are various organizations which have moved from in-house manufacturing to outsourcing and they are internationalizing their business operations due to technological changes in today’s world (Walker, et al, 2014). The organizations are taking the advantage by outsourcing their functions to others. Toyota is also one of them that adopted outsourcing due to lack of resources and talented workforce. In United Kingdom, the company has outsourced the knowledge and workforce from other companies. It assisted the organization in gaining more competitive advantage over its competitors. Additionally, it outsources the vehicle electronic system from the supplier in UK. At Toyota UK, 70% of its components are outsources that have a positive impact on the growth of Toyota in United Kingdom (Sarkis, 2017).

Challenges Faced by Toyota in its International Operations in the UK

Thus, the company has managed its international operation management process by the use of above processes and strategies. By this, the organization is able to establish its operations in UK successfully.

However, the company is able to manage its international operations in UK effectively but still the company is facing some issues under its international operations. These issues and problems are stated below:

However, Toyota has a stable financial position in UK but still it has faced various financial constraints under its international operations management. In the country, when company was introducing innovation then there was a big disruption by many natural disasters. This disaster has contributed to underperformance of company and its financial results have also negatively affected from the quality issues of products, market share loss and cost pressure intensified by the unstable market conditions in the country (Market Realist, 2018). According to a credit rating agency, this issue has weakened the earnings of Toyota as there was fluctuation in the currency market due to financial crisis. It has led the sales of Toyota in the phase of stagnation. In addition to this, there is an increase in the environmental awareness among people. Due to this, there is a delay in ability of Toyota to deliver eco-friendly vehicles that may restrict its future financial growth.

Apart from financial issues, Toyota faces some operational constraints that have affected the brand image of organization in United Kingdom. It has faced some operational issues due to its production and lean manufacturing system. Toyota has used Toyota Production System and it was worked well. Due to this, the company felt that they did not need to think about being attentive with the product quality and manufacturing process. It has caused various quality issues in its products and forced Toyota to recall its product. In United Kingdom, the location of its engine plant along with the manufacturing plant at Burnaston has decreased the long term capacity of Toyota to expand its site. Eventually it has restricted the opportunities for both the plant to expand in future. However, to deal with the issues of wastage and scarcity of resources, Toyota has implemented lean manufacturing but this was very expensive for the company. The quality management techniques of the company are not enough to manage the quality of vehicles at Toyota (Matsuo, 2015). These issues have restricted the organization in implementing innovation in its practices.

In addition to above, Toyota faces some issues related to resources and knowledge. While adopting the innovation, the company faces the issue of resource scarcity. It was the major reason that company has expanded its business in United Kingdom. To gain more resources and effective workforce, the organization has outsourced from the country. It has increased the cost of organization. These costs include training and development costs, material costs, cost of resources etc. In addition to this, it is facing the issues related to human resources. One of the major constraints is that failure in human resource management has led the company to the problems that manifested them in production defects (Heizer, 2016). The company was unable to manage the risks and other issues. Before the incident of product recall, the employees of Toyota have informed the top management about the quality of components but they avoided. It has demotivated the employees and degraded the quality of vehicles. These resources related issues restrict the organization from implementing innovation in international operations (Westland, 2016). 

To deal with and overcome the above constraints, innovation can play a significant role at Toyota Company in the cultural setting of United Kingdom. The company implements the innovation in two forms i.e. hard innovation and soft innovation (Azis, and Osada, 2010). Toyota production system is the hard innovation which enables the firm to keep enhancing the way it produces its vehicles. Moreover, the soft innovation is related to the corporate culture. One of the major elements of Total Production System is the kaizen philosophy that developed the company in the constant and incremental improvement. At Toyota UK, all the employees have participated in the process of innovation and improvement. At Toyota, the actual innovation is its production and manufacturing system which made the organization successful in United Kingdom and other nations. The reason behind this system is the continuous and strong devotion to the highest quality. If there is any issue is the production process, the manufacturing process automatically stops not to manufacture products with defects (Basulto, 2018). Innovation in production and manufacturing process can assist to overcome the operational constraints.

In addition to this, company can engage in the social innovation to deal with resource and environmental related issues. To implement this, Toyota has introduced the vehicle that complies with sustainable capacities which addresses the above given issues in UK’s natural and cultural setting. The company has utilized various development processes and solutions to innovate its engine concept. This innovation allows Toyota to stay ahead of its competitors by developing innovative-driven business development with the assistance of sustainability. Among its innovations, the company has made a large investment in the research and development of cleaner-burning vehicles which include gas engines with electric motor (De Massis, et al, 2018). It assists the organization to overcome the financial constraints also.

Moreover, this organization has not only developed better relations with suppliers but also innovates continuously to enhance relations and makes their work easier. By developing innovations, the organization can provide similar quality at its all the manufacturing plants of vehicles. Currently, Toyota is implementing incremental innovation that is related to the improvements to existing technologies with market drivers (Goffin, and Mitchell, 2016). In this way, innovation plays a significant role in the life of Toyota. Through effective innovation, company can deal with the above issues and constraints in international operations in United Kingdom.

In today’s competitive business environment, most of the organizations are working to develop a culture of creativity and innovation. As mentioned above, Toyota is confronting some issues in the process of innovation and international operation management. So, the organization needs to develop a culture of creativity and innovation by following some specific approaches (Towill, 2010). These approaches will assist the organization to overcome the above issues and stay competitive among its competitors. The approaches of innovation and creativity are stated below: 

Brainstorming is one of the major approaches which can assist Toyota in establishing a culture of innovation and creativity. It is a technique by which efforts are made to get the conclusion for any specific issue by collecting different ideas contributed by its members. Toyota can adopt this approach at its workplace to collect the ideas of employees for any issue faced by the company. For example, Toyota was facing the issue related to product quality that has affected the brand image of company adversely (Rawlinson, 2017). By the implementation of brainstorming, Toyota can collect the opinions of its employees and manufacturing staff so that they can provide higher quality of vehicles. It can assist the organization in reducing the chances of defects in vehicles. This is the most important approach which can establish a culture of innovation and creativity at Toyota.

This is another approach of creativity and innovation that can be used by Toyota to establish an innovative culture. Virtual prototyping is an approach that can be used in the product development process at Toyota. This technique includes different technological innovations like computer automated design, computer aided engineering and computer aided design and other software to authenticate a design prior to make it physical. Toyota can take various advantages of this approach of innovation (Harhoff and Lakhani,). In its manufacturing and production process, the company can implement updated technologies to make advanced vehicles (Betancourt, Mooney and Ross, 2018). Toyota Motor Corporation uses various technologies like geometry optimized data and new technologies to develop the vehicles faster and without any defect. For managing and controlling the quality of Toyota’s products, Toyota Motor can create a system of products in which technologies are extensively used. By using this technique, Toyota will be able to make its operations more advanced and smoother (Rix, Haas and Teixeira, 2016).

Stage-gate process is the process of developing a culture of innovation and creativity. Toyota can use this approach to establish an innovative culture in its workplace and manufacturing process. For implementing innovation management process, this is new technique. It takes the feedback from all the user of functions and decision phases. Toyota can use this technique to overcome the above issues and it will allow the organization to make right decisions regarding its employees and resources (Hicks, 2016). When the company manufactures any vehicle then it can manage its new product development process to enhance the efficiency and effectiveness of business operations of Toyota. It can assist Toyota in developing a creative and innovative culture in United Kingdom.

Conclusion and Recommendations

From the above report, it can be concluded that Toyota is successfully operating its business in international markets. As a leading automotive manufacturer, Toyota has expanded its business in various nations North America, South America, Middle East, Asia etc. United Kingdom is also a major country where it has expanded its operations. The above report concludes that company has implemented various effective strategies and market entry modes for international operations management in UK. The company is facing some issues like financial issues, resource constraints and operational issues. Innovation can assist Toyota to deal with these issues and constraints. It can be found that highly competitive international automotive industry and scarcity of resources has led the company to develop innovative and effective production system. Implementation of lean manufacturing has emphasized on reduction in wastage, minimization of defects and decrease in lead time. By adopting effective innovation approaches, Toyota can develop a culture with innovation and creativity. The company will be able to establish an organizational culture of efficiency and resolve the issues related to manufacturing process.

It is hereby recommended that company should make some changes in its production system so that it can make it more advanced and simpler. Innovation plays a significant role in the success of an organization so it should adopt the above innovation approaches. These approaches will assist the company to create culture of innovation and creativity. In United Kingdom, Toyota should provide effective training to the employees so that they can understand its production system and updated technologies. It should focus on managing its international operations all over the world. 

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